JN Machine Orders Up, But Take A Backseat to BoJ

Thursday, April 11, 20130
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Japan’s machine orders growth, an indicator of manufacturing activity within the export nation, was mixed in February, with month-over-month growth of 7.5% surpassing estimates of 6.9%, while year-over-year growth of -13.1% was below estimates of -7.65%. The Yen did not react significantly to the news report and continued down against the dollar on the day, trading at 99.69 as of this report.

While the growth in Japanese machine orders can certainly be a useful economic indicator for Japan, Yen movement is currently a result of Bank of Japan policy and is unlikely to move based on short term economic data no matter how positive. The BoJ’s decision to begin its aggressive monetary stimulus package has sent the Yen plummeting over the last week, with the currency down over 7% across all major currencies over the last 5 days. This is on top of the Yen’s rapid decline over the last several months, including a 27% depreciation against the dollar during the last 6 months. From here on out forex traders should be vigilant with regards to BoJ comments and their aggressive monetary tactics, which is expected to continue for some time and should hold the Yen down as a result.